SDX Energy Inc. announces that the KSS-2 well on the Sebou permit in Morocco was drilled to a total depth of 1293 metres encountering 8 net meters of high quality reservoir interval in the Gaddari and Guebbas sequences with an average porosity of 30%. However, whilst the intervals came in on prognosis, they had low gas saturation and were not deemed to be commercial.

The KSS-2 well is the sixth in the Company's current nine well campaign, of which four wells have been commercial discoveries. As a result of the campaign's success to date, the result of the KSS-2 well is not expected to impact the Company's previously announced planned production increase in Morocco in 2018.

Unlike the previously drilled targets, the KSS-2 prospect was on the upthrown side of the main bounding fault in the Ksiri area. This fault appears to have isolated the KSS-2 well from the source rock, resulting in low gas saturations. The next well in the campaign, the SAH-2 well, will be located on the downthrown side of the fault, drilling a similar structure to the Company's recently successful wells. The Company therefore believes that the reservoirs targeted by the SAH-2 well will have a higher probability of being commercially charged than the KSS-2 well.

The KSS-2 well will now be plugged and abandoned and the drilling rig will move to the SAH-2 drilling location.

Paul Welch, President and CEO of SDX, commented:

"Whilst the KSS-2 well was not a commercial success, we are viewing this one result in the context of what is already a very successful drilling campaign with four out of six discoveries to date. Using directional drilling equipment for the first time in the basin, we drilled a step out location in order to try to prove up a new concept, and potentially new volumes. Whilst KSS-2 was not successful, our belief is that this result proves that the main bounding fault provides a good seal and therefore gives us a further confidence in the forthcoming prospects. We are looking forward to drilling the final three wells in this programme and reporting on their results in due course."